Union offers olive branch on IR reform

A PROMINENT union leader has called for a new deal with business and government to move the industrial system beyond the Work Choices and the Fair Work eras.

Australian Workers Union national secretary Paul Howes has begun initial talks with business groups on the idea of a "grand compact" on industrial relations.

Mr Howes believes the current IR system has become a "blood sport" and is dragging the Australian economy down.

"We're not being dragged down by the detail of any particular raft of industrial relations legislation," he told the National Press Club in Canberra on Wednesday.

"Australia is being dragged down because we've had far too many of them."

Since 1998 there have been eight different IR frameworks.

"We seem to accept that industrial relations can be treated like a backyard game of totem tennis," Mr Howes said, pointing the finger at Labor and coalition governments.

What was needed was a circuit breaker.

The federal government should take a step back and allow unions and business to "start fostering harmony and co-operation" ahead of a new deal which could last for two decades.

Mr Howes does not have a list of concessions that the union movement could make in order to broker the deal, but he concedes there has been a pattern of unsustainable growth in wages in some parts of the economy.

Business could concede that economy-wide wages growth was the lowest it had ever been and industrial disputes were at a record low level, he said.

"Perhaps they (unions and business) might agree that penalty rates and the minimum wage are fundamental planks," Mr Howes said.

Labor and the coalition would embrace the agenda if it had the joint support of business and unions, he said.

Prime Minister Tony Abbott said he was encouraged by Mr Howes' comments.

"He was basically encouraging his colleagues to let the past be the past and I guess that is not a bad message for everyone," he told reporters in Adelaide.

Australian Industry Group chief Innes Willox said unions, government and businesses should talk about competitiveness, productivity, jobs and fairness.

"But we've moved on from the 'Industrial Relations Club' and there's no real need for any formal compact in a 21st century economy," Mr Willox said.

The debate came as the Fair Work Commission held a hearing in Melbourne to begin a review of the Modern Award system.

The review will look at common issues of concern to unions and business across all awards - such as part-time and casual work conditions and penalty rates - as well as award-specific issues.

Labor leader Bill Shorten said the coalition was "opening up the Pandora's box" to cut workers wages via the review.

Mr Abbott, whose government asked the commission to consider the impact a softening economic environment and labour market is having on employers, said the independent umpire should be left to set minimum pay rates.

Business Council of Australia (BCA) president Tony Shepherd said Mr Howes had raised some important matters.

"The BCA looks forward to a mature conversation between government, business, and unions to address the flaws in the workplace relations laws," he said.

"We can only have a meaningful conversation about fixing our flawed workplace relations system if nothing is taken off the table and if we keep firmly focused on how we can make Australia's economy more competitive and easier to create jobs and drive innovation and productivity."